Sept. jobs report upshot: Wait 'til next year

Oct. 5, 2012
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Ford employees applaud the opening in September of the new U.S. production line where the 2013 Ford Fusion midsize sedan will be made at the Flat Rock Assembly Plant, in Flat Rock, Mich. / Bill Pugliano, Getty Images

by Tim Mullaney, USA TODAY

by Tim Mullaney, USA TODAY

The non-partisan Congressional Budget Office says the economy might grow as fast as 4.4% in 2013 if not for the so-called fiscal cliff. And politicians of both parties say much the same -- though, in their case, they are arguing that their policies are what will make it happen.

The bullish view of next year may have gotten some support from today's unemployment report for September. It's not so much the headline numbers -- a 7.8% unemployment rate that was well below consensus forecasts, and 114,000 new jobs added during the month,which was close to what was expected. It's where the jobs are coming from that drives the 2013 story.

If there is to be a turnaround next year, it's pretty clear what it would have to look like. It would have to show up in a large number of jobs in cyclical industries -- housing probably would have to lead the way, followed by bumps up in categories like car dealerships, furniture stores and other kinds of manufacturing.

And on the premise that the first way to climb out of a hole is to stop digging, the nation's state and local governments would have to stop laying people off. They had cut more than 400,000 workers, including about 250,000 educators, since the private sector began adding jobs in February 2010.

Well, first of all, class is in session: State governments added 13,000 workers -- all of them educators. (Actually, they added 13,600 teachers and administrators and cut other people.) Local governments cut 7,000 people overall -- but added 2,500 school-related jobs. As real estate values stabilize and maybe even grow in some markets, the pressure on local tax revenues tied to property taxes will gradually subside.

Construction and car dealers did their part too, with construction adding 5,000 jobs and car dealers another 3,300. Half of the construction positions were at residential specialty trade contractors -- people who do kitchens and bathrooms, painters and carpenters. It's a small sign, to be sure, given that construction is a 5-million-worker industry and used to be much bigger. And it's offset by a drop in employment at furniture stores.

But it's a sign nonetheless that a certain class of customers has some money and is beginning to spend a little more. So is the 15,700-job climb in restaurant and related hiring -- not the best-paying jobs in the world, but still jobs in an economy where employment growth has been in short supply.

There are plenty of ways this sanguine picture could go wrong. Manufacturing shed 16,000 jobs. Information-technology industries were weak, with sluggish hiring at computer and software companies suggesting that business investment will remain soft for a while.

There's not much mystery why this should be so: It's fear that Europe's financial crisis will slow business, and there has been a palpable fear that the combination of more than a half-trillion dollars a year of scheduled tax-cut expirations and spending cuts in 2013 will wipe out all those rosy scenarios and cause a recession.

And it still might. Washington seems likely to try some form of austerity next year, letting the payroll tax cut expire and cutting some spending. How much won't be known at least until after the elections -- and maybe not until next year.